Can I get a loan on Universal Credit?

Updated:Mar 26, 2026

3 min read

Yes, you can. If you're on Universal Credit, you have two main options: an interest-free advance through the government, or a personal loan from a lender. This guide explains both, what you'll need to qualify, and what to look out for.

Can I get a Budgeting Advance on Universal Credit?

A Budgeting Advance is the government's interest-free loan for Universal Credit recipients. It's designed to help cover one-off costs, such as replacing a household appliance, buying clothes for a new job, or covering moving expenses.

What you can borrow

The minimum you can borrow is £100. The maximum depends on your household:

Single person: up to £348
Couple: up to £464
If you have children: up to £812

Am I eligible?

To qualify for a Budgeting Advance, you need to:

Have been receiving Universal Credit (or certain other qualifying benefits) for at least 6 months, unless the money is for employment-related costs
Have earned less than £2,600 in the past 6 months (£3,600 if you're a couple)
Not have an existing Budgeting Advance that's still being repaid

For full eligibility details, see the GOV.UK Budgeting Advance page.

Repayments are deducted automatically from your monthly Universal Credit payments, usually over up to 24 months. You won't need to set up a direct debit or manage repayments separately.

How to apply

Message your work coach through your online UC journal, or call the Universal Credit helpline.

Is a Budgeting Loan the same thing?

No. A Budgeting Loan is for people on benefits such as Income Support, Pension Credit, or income-based Jobseeker's Allowance. If you're on Universal Credit, you're not eligible for a Budgeting Loan.

The equivalent for UC recipients is the Budgeting Advance described above. If you've been searching for a budgeting loan on Universal Credit, the Budgeting Advance is what you're looking for.

If you receive other benefits alongside or instead of Universal Credit, our guide to loans for people on benefits covers the full picture.

Can I get a private loan if I'm on Universal Credit?

Yes, some lenders will consider you for a personal loan. Whether you're accepted by these lenders depends on your credit history, your total monthly income (which may include Universal Credit), and whether the repayments are affordable given what you have coming in and going out each month.

Lenders vary in how they treat Universal Credit, and some are more cautious about applications where UC makes up most of someone's income. If your credit history is limited, or you've had difficulties repaying credit before, the interest rate you're offered may be higher to reflect that.

Using a loans eligibility checker before you apply means you can see whether you're likely to be accepted without it affecting your credit score.

What affects my chances of getting a loan on Universal Credit?

A few things can strengthen or weaken your application:

Credit history: A track record of keeping up with payments on previous credit works in your favour. A poor or thin credit history makes approval less certain and may affect the rate you're offered.
Total monthly income: A higher total income relative to the loan amount you're requesting helps.
Loan amount: Requesting a smaller amount relative to your income can give lenders more confidence that repayments are manageable.
Existing commitments: If you already have significant outgoings or debt, lenders will factor those into their affordability check.

If you've been declined before or have a limited credit history, you can read more about loans for bad credit.

What should I watch out for?

Some lenders specialise in borrowers with lower incomes or limited credit histories, but be cautious about high-cost options such as payday lenders. Interest rates on these products can be very high, and if repayments become difficult to manage, they can make your financial situation harder rather than easier.

Before taking out a private loan, it's worth checking whether a Budgeting Advance covers what you need. It's interest-free and designed specifically for people in your situation.

FAQs

Will applying for a loan affect my Universal Credit payments?

Applying for a loan won't affect your Universal Credit payments directly. However, according to gov.uk, borrowed money that sits in your account is treated as your capital. Universal Credit starts to reduce if your savings and capital exceed £6,000, and you won't be eligible above £16,000. So, if your loan temporarily takes you above either threshold, your payments could be affected.

If you're concerned about how a loan might affect your entitlement, contact the Universal Credit helpline or speak to your work coach before applying.

Can I get a crisis loan on Universal Credit?

Government crisis loans no longer exist as a standalone product. If you're facing a financial emergency, the most relevant option is the Budgeting Advance (if you've been on UC for at least 6 months) or a new claim Advance Payment (if you've recently made a new Universal Credit claim and are waiting for your first payment). Some local councils also offer local welfare assistance for people facing urgent financial difficulty.

What if I can't repay my Budgeting Advance?

If you're struggling with repayments, contact the Universal Credit helpline or message your work coach. As noted on gov.uk, you can request a temporary pause of up to 3 months if repayments are causing hardship.

Can I get a bank loan while on Universal Credit?

High street banks tend to be more cautious about lending to people whose income is mainly made up of benefits. Specialist lenders and credit unions are often more accessible, as they assess affordability differently from mainstream banks.

This blog is for informational purposes only and does not constitute financial advice. Please speak to a qualified financial adviser before making financial decisions.

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